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Michael Barr has resigned as Wall Street’s top regulator but will remain as governor of the Federal Reserve, the US central bank announced on Monday.

Barr will vacate his role as vice-chair for administration at the end of February, ending a four-year term that began in July 2022. new vacancy on the seven-member board of governors.

Barr said in a statement that he resigned because of concerns that a “risk of a dispute over the position could be disruptive” to feedingThe goal is to protect the US financial system.

“In the current environment, I have determined that I can be more effective in serving the American people from my position as governor,” he said.

His decision comes ahead of Donald Trump’s return to the White House. The president-elect has promised to cut regulations in his second term, and his advisers are reportedly considering ousting Barr.

Because Barr remains a Fed governor, Trump must choose a new vice-chair for supervision from the current group of governors. They include officials such as Christopher Waller and Michelle Bowman, both of whom Trump chose for their jobs during his first term as president. Bowman, in particular, has emerged in recent years as a staunch opponent of many of Barr’s proposed rule changes — making him a potential choice for the job of elected president

The Fed on Monday said it would not make any “major directives” until a successor is confirmed by the Senate.

Since Barr assumed the top regulatory role in the US government and promised to impose tougher rules on big lenders, the Fed has faced intense legal pressure from lobby groups in bank. Some of the groups filed a lawsuit in December against the central bank regarding its framework for stress tests, which aim to identify the vulnerabilities of specific organizations in times of economic or financial difficulty.

The Fed is already considering what it describes as “significant changes” to the stress tests to reduce the volatility of the results and make the process more transparent. The changes may include amending the models that calculate hypothetical losses for banks, averaging the results over two years to reduce the risk of large year-on-year losses. change, and allow the public to comment on hypothetical scenarios each year before they are finalized.

Last year, Barr forced to revise his landmark proposal to raise the capital requirements of lenders such as JPMorgan Chase and Goldman Sachs. A bipartisan group of US lawmakers, chief executives of the biggest banks and lobbyists launched a fierce opposition campaign against the implementation of the so-called Basel III Endgame – the final rules tied to an international effort to strengthen the sector after the 2008 financial crisis.

In September, Barr unveiled proposals that would roughly halve the increase in capital requirements to 9 percent for the largest US banks, compared to the 19 percent initially floated.

Republicans cheered Barr’s decision to resign. Tim Scott, the head of the powerful Senate Committee on Banking, which oversees the Fed, said Barr had “failed to live up to the responsibilities of his position”.

“I stand ready to work with President Trump to ensure we have responsible financial regulators at the helm,” Scott said in a statement.

Congressman French Hill from Arkansas, who chairs the House Financial Services Committee, said he was “delighted” to hear of Barr’s resignation.

“I want his nominee to be committed to aligning the bank’s regulatory policies and implementing a balanced prudential management approach,” he added.

Ian Katz of Capital Alpha Partners said Barr’s resignation sets the stage for “light touch” oversight from the Fed. Bowman is “the most obvious candidate for the job if he wants it”, he added.

Barr said in his resignation letter to President Joe Biden that it was “an honor and a privilege to serve as the Federal Reserve board’s vice-chair for governance, and to work with colleagues to help maintain stability and strength of the US financial system so that it meets the needs of American families and businesses”.